Inland Revenue slammed in tax probe

MPs are urging the government to revamp procurement guidance after slating the Inland Revenue for a deal awarded to a company registered tax-free in Bermuda.

The Treasury select committee wants the government to spell out whether purchasers can restrict contracts to bidders registered in countries that adhere to European Community tax laws.

It has criticised the revenue's 2001 sale of its entire 600-building estate to Mapeley Group, a UK company with assets registered in Bermuda.

In a report on the deal, the committee said tax avoidance, although lawful, was one of Mapeley's main objectives. It said of all departments, the Inland Revenue should have been aware of this.

Legally, bidders can only be excluded if they have not paid tax they owe, or if they have been involved in illegal tax evasion. Purchasers are prevented from excluding bidders using an offshore tax structure.

Michael Fallon MP, chair of the committee, told SM: "It remains unclear under procurement law exactly who, if anyone, you can discriminate in favour of - whether it is possible to state that you want to deal with companies within the European Union or the World Trade Organisation."

The treasury will respond to the report's recommendations later this spring. A National Audit Office report will follow.

• More than 500 of the Inland Revenue's laptops and personal computers have been lost or stolen in the past five years, it revealed last week. MPs voiced fears over the loss of personal and tax information.